Tax Reform Should Go Right Down Main Street

WASHINGTON — President Barack Obama used his last State of the Union to declare 2014 a “Year of Action,” and he can claim credit for accomplishing several of the goals he laid out. WASHINGTON (AP) — Republican lawmakers are already signaling they will do what they can to block President Barack Obama’s pitch for tax increases on the wealthiest Americans.

The tone and tenor of the Obama White House since Democrats suffered a crushing defeat to the GOP during the November midterm elections have been anything but conciliatory, and have raised doubts about whether the president can — or wants to — break through partisan gridlock in Congress before voters choose his successor next year. The president has rightly called for a lower corporate tax rate even as he proposes to layer one new tax hike after another on Main Street businesses. With such proposals as more aid for community college students, Obama and his speechwriters want to open the fourth quarter of his presidency with a show of ambition and self-sufficiency. Obama is making that pitch to a huge television audience in hopes of putting the new Republican Congress in the position of defending top income earners over the middle class.

That’s because while he was able to check off most of what he promised to do through executive action in last year’s speech, Obama was unable in the bitterly partisan election year to get Congress to go along with the bigger plans he had for the country that required their approval. As Obama prepares to make that annual trek up Pennsylvania Avenue to address Congress once again, here’s a look back a year later at five of the promises he made — and which got fulfilled and denied. “Let’s get immigration reform done this year,” Obama declared to a Congress that had long blocked his efforts. Although Obama has vetoed just two bills in his six years, the White House has threatened to veto five measures from Congress this month alone — including legislation that would authorize the Keystone XL oil sands pipeline, tie funding of the Department of Homeland Security to a rollback of Obama’s executive actions on immigration and impose new economic sanctions on Iran.

Despite the partisan divisions on most issues, a substantial majority of Americans continue to see political dysfunction in Washington as a big problem. And so he did, although it was not the broad plan he envisioned that would have allowed a path to citizenship for more than 11 million immigrants illegally in the United States. But chances are the successful partnership or S corporation down the street pays federal income taxes at an even higher rate—nearly 45% in some cases. Tax increases are rarely welcomed by congressional Republicans, who now hold majorities in the House and the Senate for the first time in Obama’s presidency.

Instead, Obama took executive action to make more than 4 million of those immigrants eligible for protection from deportation and eligible for work permits. The legislative proposals he has previewed — including a plan for free community college and a revamping of the tax code — have been based firmly on his terms, drawing objections from Republicans.

His standing is nine points higher than in December and seven points higher than in October, just before Republicans captured control of the Senate, increased their House majority to its highest level in eight decades and recorded advances in the states. Twenty-two guests will join first lady Michelle Obama in her box during Tuesday’s prime-time address, as the president seeks to illustrate his priorities for improving the lives of middle-class Americans.

In 1789, it was perhaps useful to remind the president of the importance of keeping Congress (then numbering fewer than 100 people) up to speed on what was happening in the nation on the whole. According to the Tax Foundation, pass-through businesses—sole proprietorships, partnerships and S corps—employ the majority of U.S. workers and contribute the majority of business income to the national economy. For years, Obama has been asking Congress to encourage more Americans to grow a retirement nest egg by allowing all workers to be automatically enrolled in IRAs unless they specifically opt out. Yet concerns about tax rates hurting their ability to hire workers and invest in new equipment are largely ignored or waved off with a shrug and a condescending admission that we should “do something for small business.” The Obama administration’s 2012 corporate tax-reform plan is an example of this neglect.

And I’ll call on this new Congress to join me in putting aside the political games and finding areas where we agree so we can deliver for the American people.” White House aides said they see no contradiction in Obama’s approach to dealing with the GOP-controlled Congress this year, and they point out that some of his proposals received Republican support in the past. The Treasury Department has set up a new security as the basis for the investment and for the past month has been running a pilot program with a small group of employers, with plans to expand the program by the end of 2015. While most of Obama’s proposals last year were positions he had long advocated, one of the few new proposals he offered was extension of the earned-income tax credit, which helps boost the wages of low-income families through tax refunds. It’s the only filibuster-proof option available to Republicans, who control the Senate with 54 seats but must still muster 60 votes to pass other legislation. His poll numbers haven’t been helped by the speech; on average, his approval as measured by Gallup has been a point lower the week after his addresses, compared to the week prior.

Yet as Obama takes his case to the American public in his prime-time address, he has made clear that he doesn’t intend to cede much ground to his rivals. “Some of them are going to be legislative proposals Republicans may not love, but we’ll push them,” White House senior adviser Dan Pfeiffer said Sunday on NBC’s “Meet the Press.” He emphasized that the administration will use “every lever we can — whether it’s with Congress, on our own or using the bully pulpit.” The president’s proposal to raise $320 billion in new revenue over 10 years by increasing taxes and fees for wealthy Americans and big financial institutions angered Republicans, who had cited tax reform as a potential area of compromise. “I would guess the president would love for Republicans in Congress to take the bait or to somehow have our heads turned away from working toward constructive solutions in some cases,” Sen. Obama wanted it broadened to provide more help to workers without children, a view embraced by some Republicans and conservative economists. “Let’s work together to strengthen the credit, reward work, and help more Americans get ahead,” Obama said optimistically — too optimistically, it turned out.

Senate precedents limit the number of reconciliation bills — one for taxes, one for spending and one to raise the government’s borrowing cap — and so a major debate has begun among Republicans over what to put in it. Worse, to help offset the cost of the rate cut on C corporations, the administration has proposed “broadening the base” for all businesses, including pass-through businesses. SANAA, Yemen (AP) — Yemen’s U.S.-backed leadership came under serious threat Monday as government troops clashed with Shiite rebels near the presidential palace and a key military base in what one official called “a step toward a coup.” The militants seized control of state media in fierce fighting that marked the biggest challenge yet to President Abed Rabbo Mansour Hadi by the rebels, known as Houthis, who swept down from their northern strongholds last year and captured the capital in September. Obama said the goal of his energy policy is to create jobs and a cleaner planet and announced that he wanted to set higher fuel economy standards for trucks.

The violence threatened to undermine efforts by the U.S. and its allies to battle al-Qaida’s Yemeni affiliate, which claimed responsibility for the attack on a Paris satirical magazine this month and which Washington has long viewed as the global network’s most dangerous branch. The process for making the change is underway within the administration, with a new regulation planned to be proposed in March 2015 and finalized in March 2016. Bush never will live down his speech beneath that red, white and blue Mission Accomplished banner aboard the USS Abraham Lincoln; that was in 2003, before the Iraq War had claimed even half of its civilian and military casualties.

Obama is eager for his ideas to be heard by the public that he’s embraced the fragmentation of the media, announcing his community college plan with a Vine and Facebook for his immigration action. Meanwhile, health-care reform hiked payroll taxes and enacted a new investment surtax, both of which can apply to income earned from pass-through businesses.

Obama must similarly rue his two-out-of-three boast at the 2012 Democratic National Convention that “a new tower rises above the New York skyline, al-Qaida is on the path to defeat and Osama bin Laden is dead.” In subsequent speeches, Obama struggled to turn America to domestic concerns, to make his presidency more than eight years of warfare. After Tuesday’s speech, he’ll take questions from a category of people known as “YouTube stars,” one of whom is fond of green lipstick and whose 2012 video of her choking on cinnamon has been viewed 42 million times. (If you don’t feel like doing the math, that’s 126 percent of Obama’s live 2014 SOTU audience.) A bigger problem, though, is that Americans simply are no longer that impressed by the pageantry of the presidency. Inside the West Wing, presidential advisers said they don’t think Obama’s aggressive rollout of executive actions and new proposals would further poison the political environment or diminish his chances of working with Republicans on what could be lasting achievements.

Never was he more determined to keep at bay the war on terror — a phrase his White House shuns — than in his May 2013 speech at National Defense University: “So America is at a crossroads. Hadi, whose government has ceded control over nearly the entire capital, doesn’t live at the palace, and extra soldiers and tanks deployed around his private residence, which is nearby. Rather, aides said, the GOP will pursue bipartisan legislation when it is in their best interest, pointing to Republican support for a $1 trillion spending plan last month to keep the government open.

We have to be mindful of James Madison’s warning that ‘No nation could preserve its freedom in the midst of continual warfare.'” Yet continual warfare dogs America — not because of conflicts between nations, but because ruthless groups such as the Islamic State are sworn to inflict as much damage as they can against this country and other Western nations. It gives the president an excuse to talk about his policy priorities, but he certainly doesn’t need to gather everyone together in the Capitol to do that. ABOARD THE PAPAL PLANE (AP) — Pope Francis is firmly upholding church teaching banning contraception, but said Monday that Catholics don’t have to breed “like rabbits” and should instead practice “responsible parenting.” Speaking to reporters en route home from the Philippines, Francis said there are plenty of church-approved ways to regulate births. Senate Majority Leader Mitch McConnell already knows (and has likely already dismissed) Obama’s key policy goals — immigration, community colleges — even without Obama’s big address. Lower effective and marginal rates are crucial to growth, which is why tax reform should combine lower top tax rates for all business structures with a single layer of tax.

He could discuss what role the U.S. will play in these efforts, including the announcement Monday of stepped-up anti-terror cooperation between European Union and Muslim-majority nations. But he said most importantly, no outside institution should impose its views on regulating family size, blasting what he called the “ideological colonization” of the developing world. Done correctly, tax reform would reduce the marginal tax on new investments while leveling the tax burden paid by businesses of all types and across all industries.

The president also could talk about the peculiar challenges of the fights in Afghanistan, Iraq, Syria and other lands where U.S. personnel work alongside national militaries to squelch terror groups. So Obama walks onto the House floor, passing through an effusive crowd of legislators as they imagine themselves making that same walk, and the Great Spectacle of Washington is upheld.

His comments, taken together with his defense of the Catholic Church’s ban on artificial contraception during the trip, signal that he is increasingly showing his more conservative bent, which has largely been ignored by public opinion or obscured by a media narrative that has tended to highlight his populist persona. NEW YORK (AP) — Conservative distrust of Pope Francis, which has been building in the U.S. throughout his pontificate, is reaching a boiling point over his plan to urge action on climate change — and to do so through a document traditionally used for the most important papal teachings. Because this is what happens in Washington, D.C. — because this is what has happened in Washington, D.C., and, let’s face it, politicians don’t come here to upset the apple cart. That is, Obama could say that his second term won’t be what he intended it to be — but it will leave Americans safer than they feel today, in a civilized world better equipped to survive tomorrow.

And he said he wanted his encyclical out in plenty of time to be absorbed before the next round of U.N. climate change talks in Paris in November after the last round in Lima, Peru, failed to reach an agreement. “I don’t know if it (human activity) is the only cause, but mostly, in great part, it is man who has slapped nature in the face,” Francis said. “We have in a sense taken over nature.” Even before these remarks, several conservative U.S. commentators had been pre-emptively attacking the encyclical. Monday at his spiritual home in Atlanta repeated the same message: We’ve come a long way, but there’s still a lot left to be done to fulfill King’s dream. He taught us that we still have a choice to make: nonviolent coexistence or violent co-annihilation,” she said. “I challenge you to work with us as we help this nation choose nonviolence.” The courage and sacrifice of those who participated in the civil rights movement of the 1950s and 1960s provides a model for those who want to act to effect change today, Bernice King said. PANAMA CITY, Fla. (AP) — The drama surrounding two teenage sweethearts on the run from the law ended quietly and unceremoniously in a Florida beach town.

Dalton Hayes, an 18-year-old suspected of committing a string of crimes with his 13-year-old girlfriend, agreed during a quick Monday morning court hearing to return to his home state of Kentucky to face charges. The dispute between Heather Hironimus, the mother opposing circumcision, and Dennis Nebus, the father favoring it, has sparked a prolonged court battle, protests and the rapt attention of a movement of self-proclaimed “intactivists.” Judges have ruled in favor of the father, meaning the surgery is likely to happen, but the possible closure of the legal chapter has done little to mute the case’s most passionate followers. Though many still choose to remove their sons’ foreskins at the suggestion of a doctor, for religious or cultural reasons, or out of habit, opponents have been bolstered by the overall waning popularity of circumcision, and the fact this fight has gone on so long the boy at its center is now 4 years old. “I couldn’t speak when I was cut, but I can speak now,” said Thomas Frederiksen, a 39-year-old machinist who traveled from Orlando to protest, wearing a red beret and “I (Heart) My Foreskin” T-shirt and speaking breathlessly about the issue. Volumes of court filings tell the story: Hironimus and Nebus had a six-month relationship that resulted in a pregnancy, the birth of a boy named Chase, and a fight over nearly everything since. Nebus sued to prove his paternity and to get partial custody of the boy and the couple whittled out a parenting plan outlining everything from his surname to his legal address, to whom he calls mommy or daddy and, notably, what becomes of his penis.

The 2013 AL Cy Young Award winner will become the highest-paid right-handed pitcher in major league history after agreeing to a $210 million, seven-year contract with the Washington Nationals that includes a record $50 million signing bonus. A person familiar with the negotiations outlined the terms to The Associated Press on Monday, speaking on condition of anonymity because the deal hadn’t been announced.